Fed up with low milk prices from processors, most are turning their backs on dairy farming. However, some farmers are turning to milk processing and taking control of their destiny.
Bannister Downs Farm, Northcliffe, Western Australia is one such success story. Owned by Sue and Matt Daubney, Bannister Farms’ milk and cream products are now a staple on Western Australian supermarket shelves. Backed by innovative packaging, the company is now eyeing exports.
Sue Daubney, who spoke at the recent Australian Dairy Innovators Conference, says processing milk and managing your own label is not easy. But she has no regrets.
“It was a lot tougher than we had predicted,” she told Rural News. “But it provides us with a lot of motivation and responsibility and respect that we were not receiving before.”
Until 2004, Bannister Downs supplied National Foods, a processor bought by Japanese conglomerate Kirin Holdings’ subsidiary Lion. But the farmgate price was too low.
Daubney says the Lion farmgate is well below the cost of production at certain times of the year. It’s currently at A45c/L compared to costs of production in summer topping A50c/L.
For most farmers, leaving the industry is the only option. According to Dairy Australia, the number of dairy farms has fallen by two-thirds over the last three decades – from 22,300 in 1982 to just below 6770 in mid-2012. In Western Australia, there are 170 farmers compared to over 500 a few years ago.
Daubney says finance is a major issue when it comes to processing your own milk. “It is a big commitment to set up a processing facility when you are already financially struggling and have been for more than a decade. You need A$1-2 million in capital and ability to withstand up to 3-4 years of losing money every month.
“There’s also need a point of difference for your product. We were fortunate to have three strong points of difference which I think is what has got us through.”
Packaging is one of them. Bannister Downs is the first processor in the southern hemisphere to use the Ecolean packaging system developed in Sweden. The decision to use Ecolean pouches was made on both marketing and environmental grounds. Daubney says some customers hate the pouch but love the WA milk, others love the pouch for its environmental benefits.
Bannister Downs also works with major retailers Coles and Woolworths.
The Ecolean packaging caught the attention of Coles executives who then contacted Daubney. They now deliver to all 83 Coles stores in WA.
“Coles and Woolworths are the market,” Daubney says. “Rather than fight it, we work with them. Coles is innovative and we’ve developed a good relationship with them. We’ve never had to pay for shelf space or in-store packaging.”
Now, 15% of their sales go to Coles, 17% to independent retailers and 60% to cafes and restaurants.
Daubney says embracing a ground-breaking packaging technology was a big hurdle. “But it is become a real asset in that consumers are learning the benefits of the packaging and don’t look back once they make the change,” she says. “In saying that, it is still not for everyone; some people cannot [accept] milk in a flexible pack.”
The Daubneys’ hard work is paying dividends. For her achievements, Daubney won the Business Innovation Award at the Telstra Business Women’s Awards. The interest from overseas markets is also strong. Her plan is to export about one-thirds of products within 3-5 years.
